Make Money In Hot Rodding - Your Own Shop

At least once in your life you've had the universal car-guy daydream of running your own shop. The evil occupation that's been stealing time away from hot rodding could be out of the way for good; all day, every day, could be spent designing and building cool cars. Sounds idyllic, doesn't it?

2/13Picture yourself here.

While there are plenty of good things about combining your passion and your job and being your own boss, the allure of running a hot rod shop doesn't often jibe with stark realities. But right now is a unique time in America, with many people reconsidering their careers-either forced by layoff or just looking for something different. It may be the perfect time to reevaluate where you are versus where you'd like to be and shift careers, pursue a dream, and change your life. It's better knowing you tried than always wishing you had.

To help you decide if owning a hot rod shop is right for you, we picked the brains of four successful shop owners at different stages of the game and with radically different backgrounds and approaches to the hot rodding industry. We spoke with Bodie Stroud of BS Industries, Chip Foose of Foose Design, Jordan Graham of Jordan Graham Fabrication, and Troy Ladd of Hollywood Hot Rods.

Are You Qualified?
You might be surprised to discover that loving cars can have little to do with running a hot rod shop. Not to de-emphasize the importance of passion, but it's critical to remember that a shop is a business that requires familiarity with business management and with the intricacies of how a successful shop functions. An MBA isn't a prerequisite, but taking some classes and seeking professional advice was recommended by every shop owner we spoke with.

Next, you'll need to match your skills with the goal of the business. If you have specialized skills, such as wiring or upholstery, it will be more prudent to start a shop with that singular focus. The guys we spoke to are full-service car builders, but car building does not mean bolting on parts or performing minor restorations. Just because you can recognize a well-done car doesn't mean you can build one. While hiring an expert team may be the eventual goal, unless you have a large amount of start-up cash, you'll be doing much of the work yourself in the beginning. Some shops have been successful as contractors, outsourcing much of the physical labor, but you'll have a more solid foundation if you are personally competent in everything from painting to fabricating. "I can honestly tell you I know how to build every single part of a car," Troy tells us. "You have to at least know how to do each task correctly to know how to manage it."

3/13Never be too busy for customers or fans. "The last thing I want to do is walk away from someone who has been waiting for me," Chip Foose says.

If home garage builds are your only background, you're probably not experienced enough to run a full-service shop. According to Bodie, "I recommend at least two or three full builds under your belt or a solid five years or more of work at a reputable shop before going out on your own." Chip echoed the same advice, saying he wouldn't recommend opening a shop without having worked at a successful one first. Jordan, who only recently started his own business at age 20, spent the last five years working at shops and learning from local metal craftsmen.

The Commitment
Being your own boss sounds great, but it means the buck stops with you-for everything. And you need to be willing to put everything else in your life on hold because there's no such thing as a 9-to-5 schedule or even a five-day, 40-hour workweek. Bodie and his crew, for example, still regularly clock 60 to 70 hours a week. Make sure your family is ready for the commitment. "Say goodbye to the girlfriend or wife, kids, pets, hobbies, free time...pretty much anything that isn't building customers' cars," Bodie says with a shake of his head. Troy adds, "Honestly, no one would want to live the life I had to live to make this happen," recounting nights of sleeping in the shop and living off a dollar-menu meal a day.

Also, your personal projects will be back-burnered indefinitely, since each turn of a wrench will need to translate into dollars. Every shop we hang out at has a neglected car that was once a priority. Troy's wife has waited four years for her Comet to be finished, and there's no end in sight. That's also why the producers of Overhaulin' surprised Chip by building his beloved F-1 pickup for him-it had been sitting ignored in his shop for years.

Getting Work
The goal is to eventually be able to work on the types of cars you prefer with carte blanche execution, but be prepared to take what you can get in the beginning. Your opinion and guidance will be sought, but you must be ready to build what the customer wants and smile about it, even if you disagree with the choice. As Bodie puts it, "Try to gently guide people away from bad decisions."

4/13Recognize this beautiful roadster? Troy Ladd's personal car is an outstanding example of a good calling card that's earned the shop a lot of exposure and business.

There's a bit of a disagreement as to whether it's wise to open a shop without first having found a paying customer or two, since as Chip puts it, "You can hang a shingle and be without a customer for a long time." It's unlikely you'll have full builds waiting, but lining up several small jobs is smart.

"We are an Air Ride dealer, so the first job we had when we opened was an airbag replacement on a fire truck," Troy said. "Not what I wanted to work on, but it was money and helped keep the doors open." Jordan enjoys the oddball side jobs and regularly repairs and customizes farm equipment and horse trailers. "It's not some 80K car, so it's peaceful and allows some real creativity."

Also, doing odd jobs or offering your services to other larger, busier shops can work in your favor. Jordan still fights the stigma of being so young, but he was able to prove himself by doing freelance work and becoming a dependable go-to guy.

Here's a little-known fact: Many successful shops rely on one or two wealthy customers who build project after project. Those sugar daddies will often leave all the particulars to the discretion of a trusted builder, but first you have to prove your shop can deliver. So how do you get to that level of just-build-me-a-car trust? The answer we got from every shop owner was essentially the same: Always overdeliver and never compromise quality, since everything that goes out the door becomes an advertisement for your shop. Word of poor workmanship or bad business practices gets around quickly. On the other hand, exceptional work gets noticed.

5/13A good test of a strong logo: Can you make it into an emblem on a hot rod?

Once you're well established, new clients will seek you out, but in the beginning, meeting people and showcasing your style and workmanship are great ways to get your name out there. There's your one good excuse to get a project of yours finished and maybe even make it a tax write-off. Open houses and car shows are other venues to get your core customer base talking-that's why Hollywood Hot Rods has an annual show and why Chip maintains visiting hours.

The Money
Don't expect much, or really any, positive cash flow in the first year or so. Forget the glamour, fame, and TV shows-you have to be willing to start at the bottom with debt and cheap living. "I would never open a hot rod shop to make money," Chip says. "Mine started just as a place to work on my own stuff." His place became far more than that, but don't count on success. This is a profession you enter because it feels like a calling.

Start-up costs depend on what you'll be doing and where you'll be doing it. If you're in a prime location in Burbank, California, like Hollywood Hot Rods, real estate is pricey, but if you can make yourself happy in the remote countryside like Jordan Graham in Solvang, California, the bills will be lower.

As far as tools, the more the merrier, but take stock of exactly what you need to get the job done to your standards. "I think a mill and a lathe are absolute necessities in a hot rod shop," Chip says. Jordan agrees, but rather than spring for new stuff, he prefers to make what specialty tools he can by hand and then search auctions and going-out-of-business sales for the rest. You've probably paid more for a cordless drill than he paid for his Bridgeport.

Before you begin, all the cost realities need to be known, and balanced against a reasonable projection of what the business will earn over time. Those are just a few of the elements of a real business plan, a far-reaching document that will be required if you are looking for funding from an outside source, such as a bank or a wealthy businessman. In many cases, a new shop is a partnership of one or more enthusiasts. In those cases, it's smart to agree on each party's responsibilities, investments, and payments well in advance of actually going into business. Money arguments end freindships and destroy companies.

As far as income, nearly all hot rod shops operate on an hourly rate system that varies depending on location, overhead, and the amount people are willing to pay for your work. The average rate in the Los Angeles area for is $70 to $100 an hour, since expenses are so high. Jordan, however, comfortably charges almost half that since his expenses are comparatively small and his reputation is still growing.

6/13Never underestimate the income potential of cool T-shirts. Of course, it helps to have a known and respected shop name on them.

Be prepared to give away some of your time since realities and expectations rarely coincide. Customers who haven't done the work themselves don't understand the time involved, plus your standards of workmanship and theirs may not align. You need to be able to explain why a quick-shot painter can throw some color on a car for $500 but having you do it right will be $5,000.

As a general rule, never give closed-ended job quotes. Instead, charge time and materials on everything and maintain communication with clients to make sure the billing is clear on both sides. "Keep exceptionally detailed billing sheets and record what was done to every car, every hour, by every guy in the shop," Chip says. "It makes it easy to justify the bill later." Also, avoid spending your own money on a project and carrying a debt while waiting for a customer to pay. The best solution is to open an escrow account in which money for the project is deposited. "We work on their money, not mine," Chip says. Working with this system will help keep profit in the black and allow customers to work at their financial pace.

The Legal Mumbo Jumbo
What do you plan to do at your shop? Fabrication? Paint? Full builds? That has to be taken into consideration for zoning, noise, permits, and fire and environmental regulations-not to mention satisfying the building inspectors. As Troy puts it, "No one wants car people on their property." Paint shops will especially find themselves with chemical and safety regulations, but in many areas, even mundane shop supplies such as carb cleaner and spray paint are regulated. Disposal of oil, metal parts, and tires may also be a concern, and in urban areas you may need to deal with parking and handicap rules, especially if you have a showroom. You'll also need to visit the city office for that information, as well as for a business license. Learn what you're up against before moving into a building or even before going into business on your own property. It's better to know in advance than get caught down the road.

Sole proprietorship is fine for one-man bands, but when a shop grows, it's time to consider a different kind of business structure, such as a limited liability corporation (LLC). This is an area where professional advice from a lawyer and tax adviser is a must. Also, believe it or not, the IRS and the Small Business Association have an incredibly helpful interactive checklist on their website at this address: http://web.sba.gov/sbtn/sbat/index.cfm?Tool=4.

7/13Don't forget to factor in tools. A fully stocked hot rod shop will need tens of thousands of dollars in tools to be competitive.

Insurance is a touchy subject, but if your shop is loaded with tens of thousands of dollars in parts and tools as well as many times that value in customers' cars, a high level of protection is a must. Security systems might help ward off thieves, but they won't do much for natural disasters or fire. Bodie, for example, carries a multimillion-dollar policy so customers' cars are adequately covered. You also need to cover trip-and-fall issues for customers, and product liability is a must for protecting you if someone gets hurt in a car you built, or even in a car using a part that you manufactured.

If you have employees, then insurance, worker's comp, and unemployment are a few of the pricey facts of life. Alternately, you can opt to use independent contractors in your shop, which means you pay for their work, but they pay for their own insurance.

Branding
Depending on whom you ask, branding yourself may be one of the first steps to opening a business. Troy had every aspect of Hollywood Hot Rods' merchandising planned out before seeking a business loan, since projected merchandise sales can help obtain a loan. Design awesome T-shirts and merchandise and market them wisely, and sales can make up for slow business months.

Apparel also leads to brand familiarity, which gives customers a certain level of trust. The more exposure your shop's name can get, the bigger it will seem in people's minds. Bodie says, "Get people familiar with who you are and what you do." Never underestimate the power of magazines and certain online sites as well. Troy credits his 60-plus appearances in various publications since 2002 with much of his shop's meteoric rise.

Regrets?
You won't find many regrets among the builders we spoke with. Some of these guys have made it, some are still working on it, and some are just starting out, but none of them would rather be doing anything else. The real thing to keep in mind is that owning a hot rod shop is as much business as it is pleasure. Don't let the realities kill the dream, but don't dive in blind, either.

Chip Foose: Years Of Experience
Chip Foose became a household name thanks to the Overhaulin' TV series, but the reason he got that gig was because of his extensive background in hot rod building and design. He's definitely not an overnight success story.

8/13Building hot rods should be fun, even if you're signing the check to let bigger talent do the metal burning.

Chip started out working with his dad, Sam, a noted customizer in his own right, and for 15 years he learned every aspect of paint and body. Always gifted with an eye for design, he was accepted to the highly respected Pasadena Art Center and graduated with honors. Next, Chip was hired into the Asha Corp., where he quickly climbed to the position of director of design, handling design and prototyping for car manufacturers. Like those buttons on your car's visor that open your garage door? Chip designed one of the first prototypes. After that, he worked at several other design companies, all while working with his dad building hot rods and movie cars.

Chip eventually accepted a job at Boyd Coddington's Hot Rod Shop where he helped create some striking cars. "I would have happily worked at Boyd's and had my shop on the side forever," Chip says.

When asked about his key to success on his own, Chip had one answer: diversification. Building award-winning hot rods helps pay the bills and is his true passion, but since he and his four-man crew usually devote their time to only two or three builds at once, Chip really considers the products and other far-reaching design-related services offered through Foose Design his bread and butter.

Bodie Stroud: Thrust Into It
As manager of a fleet of 450 trucks, Bodie Stroud had a well-paying career that allowed him to build a few impressive hot rods on his own time, and one was featured in Custom Classic Trucks.

9/13Business comes first, personal life second. Bodie's a king of multitasking, occasionally handling three things at once while getting tattoo work.

Two and a half years ago, Bodie's compnay downsized him out of a job. His experience managing people and large operations could have led him to lucrative positions in other sectors, but what he really wanted was his own hot rod shop. He had votes of confidence in his work from recognized builders but needed to decide if he had enough in himself.

Thanks to living below his means, saving, and wise investing, Bodie had a significant nest egg to get his shop rolling. A friend of a friend gave him a good deal on shop space, he already had many of the necessary tools, and he also had a customer. A guy who lives down the block from Bodie had seen his work, heard he was opening a shop, and stopped by to talk about the first of several cars he wanted to build. He'd just been waiting to find the right person to handle them. Bodie was able to open his doors and start working right away.

Successful networking and just being an all-around nice guy landed BS Industries on HOT ROD TV and Discovery Channel, as well as several magazine tech articles. Considering the amount of success he's had in only two and a half years, we'd say Bodie made the right call to chase his dream.

Troy Ladd: By the Book
"I did it exactly opposite of anyone else I've ever talked to about it," Troy Ladd says. While most guys are driven by desire to open a shop, Troy was actually very reluctant to take the step from hobbyist to professional. When it became obvious that building hot rods was what made him happy, it was Troy's wife, Devida, who suggested he quit the construction business and open his own shop. "I thought it was the most ludicrous thing I'd ever heard," Troy says. "I had a degree and a good-paying job-you don't just throw that away." But the more he let it sink in, the more he liked the sound of it.

10/13If loans are in the cards, a strong business plan is a must. According to Troy, it's also an excellent way to judge your progress and see if your expectations were in touch with reality.

He got into the hot rodding job just how he'd gotten into construction-by the book. Though he had years of experience personally building cars and managing people, Troy went to night classes to learn the intricacies of business as well as to trade school classes to master every step of a build.

Next came the extremely detailed business plan, which took months to write and rewrite with advice from legal counsel and friends. Troy had every detail mapped out: name, logo, and cost and profit projections. Despite his thoroughness, Troy says every loan officer laughed at him until he was able to get it in front of a friend of a friend. Even then, he barely got the loan. What clinched the deal? Troy included a few magazine clippings from tech stories he had assisted with, and the loan officer was able to interpret that as proof of viability in the market.

Since 2002, Hollywood Hot Rods has been in more than 60 magazine articles and numerous television shows, including HOT ROD TV. The shop is crammed with projects and occasionally has a waiting list. Looking back over his business plan that he hadn't seen in years, Troy happily noted that he was right on track.

Jordan Graham: Just Going For It
Jordan Graham knew very little about building hot rods. He was interested in cars and knew how to weld but didn't have the fabrication and design skills necessary to create the traditional hot rods that appealed to him. He realized that the older generation of rodders who started it all were dying off and that it was up to his generation to make sure their knowledge lived on.

11/13This particular machine for dropping I-beam axles was built using old parts and scrap steel that Jordan found, yet it's deadly consistent on every axle and has earned him thousands of dollars in work over the past couple of years.

To learn the skills, Jordan hung out with local metal masters, learning as much as he could and volunteering at shops such as Steve Sellers' trading work for training. His dedication and skill earned him a place as a fabricator on Robby Gordon's off-road team. Jordan highly recommends dirt sports as an entry for new guys since the demand for quality workmanship is extreme, but the competition for the positions is less stiff. Using the experience he gained, he built his first Model A coupe, which he drove almost daily for a while.

Jordan learned that a family friend was planning on tearing down an unused but nearly new steel building on his property, and Jordan offered to pay rent and take on some of the owner's projects in return for letting him move in. This was his first step out on his own, and it was intimidating. Jordan was able to avoid applying for bank loans by selling the coupe, which paid for a few months' rent and most of the tools he needed.

Jordan is just 20, which is great for youthful exuberance, but it's also worked against him, since his age doesn't convey experience to some guys. His solution was the same as he used earlier: He offered his services for low rates, or even free, to other shops to prove his skills. It's worked well, as he has become a regular supplier of dropped axles to some of the biggest names in hot rodding and regularly handles custom metalwork as well.